June 2015 Home Of The Month – Kensington Market

College Street / Little Italy

Welcome to urbaneer.com's Home Of The Month. This feature provides a snap shot of what urbaneer.com's Buyers have recently purchased in the City of Toronto.

This month's tale is unique, in that it didn't require the usual exhaustive search on the part of our Toronto Buyers to find the ideal place to put down roots, and then be forced to blindly compete one dollar more than they had in a bidding war to secure it (here's Dear Urbaneer: Why Is The Toronto Real Estate Market So Hot which explains the reality of our sizzling market). In fact, their situation was completely the opposite. This is a story about our Buyers finding the perfect property and, despite it being the only option available to them, their having to reconcile value, show patience and restraint, and whole-heartedly subscribe to the belief that the universe would truly manifest their domestic destiny.



First, imagine you're living in your charming – albeit itty-bitty teeny-tiny studio loft condo – and discovering that the loft next door to you – as in on the other side of your party wall, has come to market for sale for $499,900. And you think, rather than search for alternative larger accommodations in your current neighbourhood (where what you love is 800k+) that hopefully has all the merits of loft living – like ample light, soaring ceilings, and low maintenance living – you just kept it simple and bought the loft next door? Wouldn't it be more easy to just purchase your neighbour's place and combine it with your own to more than double your square footage?

Wouldn't that be easy peasey?

When the buyers called me on the referral of a past urbaneer.com client, it was first to see an 1880s high-styled-but-really-needed-a-ton-of-work row house around the corner from their Kensington Loft near College and Spadina. With its sloping floors, questionable basement and leaking eavestroughs, they paused suitably to consider whether this was an appropriate direction to go. But when it subsequently spiked 12% over its 699k list price, the 499k studio loft next door – now 125 days on the market and just reduced to $474,900 – suddenly seemed like a much better contender.

So we looked at it together, where I decreed it was ideal for them, but still grossly over-priced.

In fact, I valued it at $442,000.

Now imagine you want a place really really really badly. It's so perfect that you don't care how much it's going to cost you, because you can already see yourself living there. But there are a few issues to resolve. Like it's a condo – and there's a common element wall separating the two units. Do you need permission from the condo corporation? What is the wall made of? Does it require some sort of structural reconfiguration? What sort of process is involved to get this resolved, and can you execute this without the neighbour next door knowing? After all, if he knows you're the interested buyer, isn't he going to hold you hostage for top dollar? (Yes, the owner will hold you hostage for top dollar.)

So in advance of making an offer, the Buyers and I put into play the necessary steps required to address all of the critical factors which needed to be satisfied before negotiations could happen. This included liasing with the property management, reviewing the condominium declaration, obtaining the building's drawings, and seeking counsel from the original architects. The end result? Ten days of comprehensive due diligence determined that the party wall was frame construction so that a connecting door could be installed without any significant structural change and – miraculously – that the Condo Declaration stated it could be completed as-of-right without the approval of the condominium board! Once that was established we proceeded with an offer.

But first, a little about this great loft conversion.

Kensington Lofts comprises two buildings. One is at 21 Nassau Street – the former site of the William Houston Public School which dates from the 1920s, and the other larger building is the former George Brown College Building which dates from the 1960s. It was converted to 145 loft condos in 1999 by Context Development Inc., a developer well-known for projects including 333 Adelaide (MoZo Lofts) and The Tip Top Tailors Conversion on Lake Shore Boulevard. The building features high concrete ceilings and the units have either hardwood or concrete floors, as well as huge windows which slide and allow the energy of Kensington Market to filter in. Kensington Market is evolving and gentrifying, rapidly becoming a trendier place to live for members of the professional class, who are drawn to its funky character and relatively wallet-friendly properties. Consequently neighbourhood prices are on the rise.

Here's some snaps of the building and the 700 square foot loft which tell the tale:



The Negotiations

When you're negotiating with a Seller who is attached to obtaining a sum that exceeds market value, you have to play it cool.  And when that Seller is next door, you also have to structure the offer so that he doesn't clue in that it's his neighbour bidding on the place.

So what did we do?

We submitted a low bid accompanied with a detailed analysis of recent sales in the complex to demonstrate both how well-informed we were as well as our fair rationale for the offering price. Although our assessment for pegging the value was comprehensive, it wasn't completely straight-forward ‎for a couple of reasons. First, the seller was attaching a 24k value to his upgrades, several which were of no value to our Buyers. This included a projection system and screen which – while costly at the time of acquisition – were now dated if not obsolete. There was also a rotating electric disco ball, and a shag-encased sleeping loft which was certainly 'groovy' but not worth the premium the seller felt it deserved. Both taste specific and aging, we made a point of removing as many of his high-priced superfluous upgrades from the inclusions list to simply remove them as negotiables. 

From the Seller's perspective, our value assessment on his loft's placement in the preferred smaller vintage school building of the two Kensington Loft structures – with its enchanting treescape exposure and massive floor-to-ceiling windows and the value of his parking space – which is indeed rare to find – was deemed too low by him. In his defense, the views from the loft were superior to our comparables. Plus we learned he had recently solicited the entire building in the hopes of purchasing another parking spot ‎to no avail. So when we suggested the parking space was worth 25k, he countered it could be worth as much as double given he himself had been prepared to pay top dollar to secure one. As is always the case, market values cannot always be determined to the dollar.

When negotiating a property purchase for the absolute best price, you have to be prepared to walk away and with that, reconcile the risk of losing it. ‎In this instance, I put the brakes on negotiations when the Seller showed movement, yet it still wasn't as low as I felt we could ultimately go. True, it wasn't easy for my Buyers to let the Seller's counter-offer to them expire for a few days – especially when it was a sum they had once considered paying – but as their realtor I felt we could do better. However, for that to happen it was essential‎ the Seller experience the devastation and loss that comes when negotiations fall apart. 

Think about it. As much as the Buyers are excited about the prospect of securing their Dream Home (and reconciling a willingness to pay more!), the Seller may also be envisioning moving forward in the next chapter of ‎his life (and reconciling a willingness to accept less!). While the Privacy Act prohibits the personal motivations of the Buyer and Seller being discussed, after four months being 'For Sale', and a counter-offer that signaled more willingness on his part to sell, I felt he would soon be ready to exit his loft for less money. 

A few days later we resubmitted the offer at our 441k price conditional on financing, and to our delight the Seller accepted. ‎Fair and square. 

Twenty-four days after viewing this loft, we managed to secure and negotiate this space for $441,000 – or 7% below the asking price (and $1000 less than my appraised value). With the right to connect the two spaces, our Buyers original 450 square foot loft lends itself to having the existing kitchen removed and capped and converting the space into two bedrooms with ample storage and one bath, while the new space can serve as their Entertainment Zone with guest loft. I have recommended the Buyers ensure the opportunity exists to restore the two lofts back into their original layouts should necessity or desire require it. In my opinion, having the ability to create an instant income supplement offers any one more security, and should they relocate but want to keep the properties as investments, the market rents from two smaller places typically exceeds the value of one.

These terrific Buyers entrusted our services to help them find that dream space. And they were kind enough to write the following testimonial:

“Steven Fudge has got an uncanny genius for pinpointing value, intuiting his clients' needs, and finessing a sale. When we found the place we wanted, he advised us on its real value, and then guided us through a painstaking negotiation over several weeks that ultimately saved us a downpayment-sized bundle.

It's not every day that you get the privilege of working with someone who is so good at what they do. We were thrilled by the chance to see his superhuman cunning in action–and we also felt monumentally relieved that, in this treacherous real estate market, we had him on our side.

We'd say Steve is Toronto's best-kept real estate secret, but we can't stop recommending him to everyone we know. The secret's out!”

A big thanks to our clients for entrusting us to help you find your Homes!

We LOVE what we do, and consider ourselves most fortunate.

Serving first and next-time buyers, relocations, renovators and those building their long term property portfolios, our mandate is to help our clients choose property which will realize the highest future return on their investment while ensuring the property best serves their practical needs and their dream of “Home” during their ownership. At urbaneer, we identify a property's best qualities, features and insouciant charm in the context of your wishes and wants, plus your future target market. Although searching for the right property can be an intense and sometimes lengthy process it is, without fail, rewarding both to our clients and the urbaneer team. We are so grateful to be the realtor of choice for so many Torontonians, and new arrivals.

If you, or someone you love, has specific real estate needs, wishes and desires, and would enjoy the personalized service of a Top Producing boutique real estate team who subscribe to a pressure-free approach, please know we're here to help at urbaneer.com.


~ Steven and the urbaneer team

** Did you know we also lead a Student Mentorship and Internship Program for Canadians being educated in the field of housing? Consider visiting our newest architecture, design and landscape site called HousePorn.ca

Like what you've read? Consider signing up in the box below to receive our FREE monthly newsletter on housing, culture and design, including our love for unique urban homes and other Toronto real estate!

Buy Of The Month

Previous Post
Pizzeria Defina in Roncesvalles Village
Next Post
Dear Urbaneer: What’s Behind This Crazy Toronto Real Estate Market?